Near four per cent rise in the number of Scots planning to launch their own business
The number of Scots planning to launch their own business is on the rise again according to academic research produced by the University of Strathclyde.
Author of the report, Professor Jonathan Levie of the University's Hunter Centre for Entrepreneurship, found the number of Scots expecting to start their own business in the next three years was significantly higher in 2011 than in 2010.
The Global Entrepreneurship Monitor (GEM) 2011 survey found that the proportion of working age individuals in Scotland who expected to start a business in the next three years rose from six per cent to 9.8 per cent.
These latest figures, compiled from a sample of “around 2,000 individuals aged between 16 and 80” suggest “a long, slow decline in early-stage entrepreneurial activity was arrested in 2011”.
Access to finance continues to be a barrier to starting a business with half of non-entrepreneurs thinking it would be their biggest problem and almost half of entrepreneurs citing it as their biggest difficulty.
A quarter of Scots entrepreneurs surveyed said the biggest hurdle to starting a business was finding suitable staff, compared to just six per cent of entrepreneurs UK-wide.
By contrast, 28 per cent of UK entrepreneurs cited not knowing how to start and run a business as one of their major obstacles compared with just 14 per cent in Scotland.
The survey also reveals small business employees engaged in new business activity for their employer is significantly lower in Scotland than the rest of the UK – despite a high level of recognition from employees their employers support individuals who come up with ideas for new goods and services.
Professor Levie said: “It is encouraging that entrepreneurial intention has increased and this could lead to an increase in actual new business creation rates over the next year or two.
“The long, slow decline in early-stage entrepreneurial activity also appears to have been arrested, if not reversed, in 2011.
“However, while there is room for optimism, more needs to be done to turn the intention to start a business into reality.
“Scottish entrepreneurs still face challenges in getting funding, customers and staff.
“There is also considerable scepticism across the Scottish public about the wisdom of embarking on an entrepreneurial career, despite the relatively high status afforded to successful entrepreneurs.”
Sir Tom Hunter, who endowed the Hunter Centre for Entrepreneurship at Strathclyde, said: "The good news is this year’s report indicates there are signs that the decline in early-stage entrepreneurial activity has halted.
“The report shows that the proportion of working-age individuals who intend to start a business has also increased, but if we are to succeed on a global stage, we need to do more.
“In many areas we are no longer lagging behind the rest of the UK.
“Perhaps some of our initiatives in education are now starting to bear fruit, as founders’ knowledge of how to start in business in Scotland compares favourably to the UK.
“Now we need ambition that avoids or jumps the hurdles, innovation that doesn’t expect Government to provide, or you or me to solve problems. We need entrepreneurs that get on with it.
“GEM Scotland allows us to see where we are, not where we are going. It's up to us to invent where we go next, so let’s get on and do that – self-determining how you intend to build your business is the only way forward.”
Colin Borland, the Federation of Small Businesses’ (FSB) head of external affairs in Scotland, said: “The report shows that the barriers which stop more people going into business differ significantly from the challenges which those in business actually experience.
“There still seems to be a significant gap between the general public’s view of what it takes to run a business and the reality. This has to be addressed.
“If we burst the myth that the entrepreneurial spirit is dead in Scotland, our next job is dismissing the tired idea that, if a business’s growth ambitions aren’t stratospheric, it isn’t valuable to the Scottish economy.
“Scotland needs all types and sizes of businesses whether it is the mid-sized business on the verge of going global or the self-employed tradesperson earning enough to support themselves and their family.
“We should start with encouraging more people to develop the skills valuable in most modern enterprises - this will serve them and the economy well while they’re an employee and if they become employer.”
The 2011 GEM Scotland report is the eleventh assessment of national entrepreneurial activity, which analyses entrepreneurial attitudes, activity and aspirations as well as the factors that underpin them.